David Sokol (left) is ‘certainly one of the people on everybody’s short list,’ said Andy Fitzpatrick, who has written a book on Warren Buffett.
Switch fuels talk of who will succeed Buffett
OMAHA, Neb. - The departure of NetJets Inc.’s founder is stirring speculation about who has the inside track on succeeding billionaire Warren Buffett at the aviation services company’s parent, Berkshire Hathaway Inc.
Buffett named David Sokol as NetJets chairman and interim chief executive to succeed Richard Santulli. Both men were among four people mentioned as possible successors to the legendary Buffett at Omaha-based Berkshire.
Sokol is the current chairman of Berkshire’s utility company MidAmerican Energy Holdings Co., based in Des Moines.
Analyst Justin Fuller said he thinks Sokol has the edge.
“In my mind, it continues to make him - if I were to handicap it - the front-runner to take over the operating side of Berkshire at some point,’’ said Fuller, of Midway Capital Research & Management in Chicago.
Buffett did not respond immediately yesterday to a request for an interview about NetJets, which allows people and companies to share ownership of private jets. Sokol declined to be interviewed.
To replace Buffett, Berkshire plans to split his job into three parts - chief executive, chief investment officer, and chairman. Buffett, however, has indicated he has no plans to retire, and the 78-year-old says he remains in good health.
Besides Sokol and Santulli, the other Berkshire managers who have been mentioned as possible chief executives are Ajit Jain, who runs Berkshire’s reinsurance division, and Tony Nicely, chief executive of Berkshire subsidiary Geico.
Buffett has said previously that the company has three outstanding internal candidates for chief executive, but he has refused to name them.
Andy Kilpatrick, the stockbroker-author of “Of Permanent Value, the Story of Warren Buffett,’’ said it was a bit of a surprise that Sokol was picked to run NetJets, but it says a lot about Sokol’s abilities and it will contribute to speculation that he’ll be Berkshire’s next CEO.
“It’ll definitely have more people watching Sokol, and he’s certainly one of the people on everybody’s short list,’’ Kilpatrick said.
The move at NetJets also differs somewhat from what’s happened in the past when Berkshire subsidiaries needed new leaders. Buffett has said he asks all the leaders of Berkshire’s subsidiaries to identify their own successors, and it is rare for Berkshire to move its managers among businesses.
In a statement Tuesday, Santulli said he informed Buffett earlier that day that he planned to step down immediately at NetJets after a 25-year career, so he could spend more time with his family and pursue other interests. He will remain with the company as a consultant for at least the next 12 months to assist with the transition.
“It is with reluctance that I accept Richard’s decision to step down,’’ Buffett said in a statement. “Richard Santulli is synonymous with the fractional jet ownership industry and his vision and energy has made NetJets the leader that it is today.’’
In the past, Buffett has praised Santulli’s management, even as NetJets struggled to become consistently profitable. Buffett said in last year’s letter to Berkshire shareholders, “If you were to pick someone to join you in a foxhole, you couldn’t do better than Rich. No matter what the obstacles, he just doesn’t stop.’’
NetJets got started when Santulli took over Executive Jets, a traditional charter company, and introduced the fractional share form of ownership.
Buffett was one of NetJets’ early fractional share customers, and Berkshire Hathaway acquired NetJets in 1998 for $725 million.
In its 2009 first-quarter report, Berkshire said NetJets revenue dropped due to an 80 percent decline in aircraft sales and lower flight revenue hours as businesses and other travelers cut back on plane usage.